What should Louisiana do with its rare budget surplus?

Updated on Sep 22, 2017 at 01:23 AM CDT

Louisiana House Speaker Taylor Barras, left, and Senate President John Alario were unable to reach an agreement on an operating budget before the regular session ended Thursday, June 8,
2017. (Photo by Sarah Gamard, Manship School News Service)

With a surprise budget surplus and options for using it limited by law, Louisiana officials are starting to ponder how to allocate the money. No consensus has emerged, however.

The Legislature will make the call when it returns to Baton Rouge in 2018, said Senate President John Alario, R-Westwego. It will have an unusual task on its hands, as budget surpluses have been rare in recent years.

About $140 million more in state taxes, fees and other revenue came into the state during the fiscal year that ended June 30. But state spending for that budget cycle hasn't been tallied yet and could be higher-than-expected as well. So the precise size of the surplus isn't known yet.

State law says a portion of surplus money must be used only to pay off retirement debt and replenish the "rainy day" fund. Whatever money left can also be used to bolster coastal protection and construct roads and buildings. So far, elected officials appear to have different priorities.

Gov. John Bel Edwards hasn't come to a conclusion about where he would put the surplus funds yet, according to the governor's spokesman. He will continue to speak to legislative leadership about the best options moving forward.

House Speaker Taylor Barras, R-New Iberia, said he prefers putting the money in the
rainy day fund
, a
reserve account
that the Legislature may tap when it has a midyear budget shortfall. Lawmakers did just that less than a year ago when they took $99 million out of the fund, so Barras said they should repay the fund.

Alario said the state should bank the surplus for a while before deciding how to allocate it. He worried about the recent expense of deploying the Louisiana National Guard to respond to Hurricane Harvey.

House Speaker Pro Tempore Walt Leger, D-New Orleans, wants to look at using the surplus to pay off state debt earlier, especially if that frees up money in the operating budget next summer. Louisiana is facing a $1 billion budget shortfall July 1, when the state sales tax is scheduled to fall by a penny on the dollar. If paying off debt earlier would help close that gap, Leger favors it.

He said lawmakers also are likely to want to use the money to pay for languishing road and transportation projects. Legislators from the southern portion of the state might also want to spend some of the money on coastal restoration, which helps protect communities from hurricanes.

Leger said he opposes putting all of the surplus into the rainy day fund, given Louisiana's infrastructure needs and looming budget crisis. Senate Finance Chairman Eric LaFleur, D-Ville Platte, said he would also consider infrastructure spending a good place for the surplus, though he hadn't thought too deeply about the subject yet.

The budget surplus may not be used directly to lessen next summer's budget deficit because state law prohibits spending surplus money on recurring expenses such as employee salaries and the TOPS college scholarship fund.